16 September 2019 (closed)
USD/IDR (14,099) +19.00 +0.13%
EUR/IDR (15,556) -25.51 -0.16%
Jakarta Composite Index (6,219.44) -115.41 -1.82%
In late April 2019 it was rather suddenly announced that President Joko Widodo wants to move the capital city away from Jakarta (in fact, he even wants to move the capital away from Java Island).
Although the idea of moving the Indonesian capital is not new at all - this topic actually surfaces every once in a while - the latest news came at a surprising time: election officials are still busy counting all votes that were cast in the country’s presidential and legislative elections; usually not the time to announce or suggest any big changes.
In fact, such odd timing made us think Widodo is perhaps deliberately trying to somewhat shift attention away from the elections by announcing this plan to move the capital. Although having eased significantly, there were some serious tensions surrounding the country’s presidential election, especially after presidential candidate Prabowo Subianto (who has lost the race if the quick counts and exit polls are correct) declared victory, and even declared himself president of the Indonesian people, in an apparent attempt to provoke his supporters and opponents (and probably hoping on outbursts of violence).
Another reason why we highly doubt to see any swift short-term decisions on the relocation of Indonesia’s capital city is that a new location is yet to be decided. It will require technical studies and a masterplan before a new center of governance can be determined for Indonesia. This is a process that will most likely need several years to be completed. Widodo himself added that moving the capital “requires thorough and detailed preparation”. Therefore, a definitive decision may only come near the end of the second Widodo administration (if he is indeed declared the official winner of the presidential race). And we certainly do not rule out the possibility of seeing no decision at all about the relocation of the capital in the next five years.
This article discusses the following:
• The intention and possible scenarios that Widodo and Bappenas have expressed
• Whether moving the capital will really solve Jakarta's problems
• Our thoughts about moving Indonesia's capital city
Read the full article in the April 2019 edition of our monthly research report. You can purchase the report by sending an email to firstname.lastname@example.org or a WhatsApp message to the following number: +62(0)8788.410.6944
Poll Indonesia Investments: